I recently served as a judge at the Rose Bowl of MBA case competitions; the Pac-10/Big-10 MBA Business Case Competition. Each university sends their best team of MBA students to challenge the teams of the competing universities in a business case analysis and presentation. I had a fantastic time, but also recognized three important lessons for students and “seasoned” business people.
1. The obvious problem is rarely the real problem.
In the business case, the company was obviously burdened by massive debt as a result of numerous acquisitions. Every team spent at least 90% of their time articulating strategies to reduce the debt load.
Unfortunately, in the real world, there was nothing that could be done about it. The acquisitions were recent and to try to sell them would certainly require a fire sale and inevitably lead to the parent company’s stock tanking (not to mention the warrants that would likely be violated). More amazing was that most teams then recommended that the funds from divesting certain businesses be used to acquire “better” takeover targets. Huh!? We blew it the first time, so let’s do it again!?!
I am not trying to bash the MBA students here, but rather demonstrate a problem I see all the time (even among seasoned leaders). In a frantic attempt to address the obvious problem, no one recognized the REAL problem: Management of the company in the case had become dependent on buying growth through acquisitions and had lost their ability to grow their core business! This is an all too familiar recipe, particularly in the Supermarket industry. Sales are slow….the solution…build more stores!! Obviously, this is sometimes the correct decision, for example when new suburbs emerge, or when a store is simply out of date. But, all too often, retailers build stores to mask their own inability to grow sales at the locations they already have. Acquisitions are even trickier. If you can’t grow a business you already own, how in the world do you expect to fix the business someone else is trying to get rid of?
[Are you listening GM? Don’t buy Chrysler!]
The lesson: If a problem seems obvious, you’re probably not looking at the real problem. Take the time to understand why the obvious problem emerged in the first place and focus on resolving that challenge.
2. Product positioning matters!
More than half of the teams presented a plan that included increasing pricing on a value brand to increase revenue (only one team calculated the inevitable decline in volume that would result). Unfortunately, none of the teams recognized that this would create THREE premium brands in the category.
I’ve got nothing against premium products, but what makes anyone think they can simply change consumer perceptions of a value brand by raising the price. Even if the product is EXACTLY the same, that doesn’t mean it will be perceived that way. Just look at generic drugs; they are chemically identical, but all of that advertising Tylenol does still convinces consumers that it is somehow better. Quality is perceived, and a brand that invests in shaping that perception will always have an advantage.
And what’s wrong with being a value brand? Great products that cost a bit less than the premium offering (i.e. value brands) are always appealing, if they in fact offer a value. What do you think has driven private label for the past twenty years. It wasn’t those snappy white boxes they started in. The key to success is to clearly position your brand where there is a real need for consumers, and in a manner in which you can deliver with excellence.
The lesson: Any clear product positioning can work. The more your product strategy sounds like someone else’s, the less likely it will succeed.
3. Always take the high-road, but bring binoculars so you can see the facts.
I firmly believe that integrity is everything, and that one should stand firm in defending high ethical standards. During the judges’ deliberations, several of us noticed that one team had used material (from the Internet) that was outside the timeframe of the case. This was prohibited, and I felt it was unethical. I immediately insisted that we must disqualify the team if our assessment was accurate. Unfortunately, the team in question was the clear winner and it was unclear that the prohibited information materially impacted our evaluation. To me, this was irrelevant. The team had broken the rules and, no matter how difficult it may be for the judges, we must agree on an alternate winner. I made my case emphatically and the other judges agreed.
BUT, fortunately for me, experience has taught me to always check the facts, especially in cases of ethics. I requested a copy of the EXACT documents and instructions that each team had received to verify what they had been told. To everyone’s surprise, the instructions the teams had received were different than those given to the judges. Their rules did NOT exclude material after the case dates. So, the accused team had NOT broken any rules and the judges unanimously voted them the winners.
What I had learned was that fighting for high ethical standards rarely makes one popular. I had been surprised by the willingness of some to “excuse away” behavior because of superior performance. But, I was also surprised by how those same people supported my position after I shared my rationale. Ethics may be grounded in values, but it also requires rational interpretation. Just because someone doesn’t evaluate an ethical issue in the same way as you initially, doesn’t mean they don’t share your high ethical standards. Repositioning the issue often casts it in a different light.
The experience also revalidated the importance of getting all of the facts. The competition was delayed by an hour (a very tense hour), but the effort to make a fully informed decision ensured the appropriate judgment. As importantly, the issue was handled discretely and no one’s integrity was called into question inappropriately.
The lesson: Stand strong and fight for high ethical standards. You will be challenged (particularly if the offender is a top performer), but help others understand the basis of your concern. And ALWAYS check the facts. Assumptions are often wrong.
By the way, USC won this Rose Bowl too.
One of my favorite examples of effective advertising is finally getting some credit in an article in AdAge. HeadOn; You know the ads. An incredibly annoying voice-over repeats incessantly, "Head On...apply directly to the forehead!" while a woman wipes a mondo-ChapStik on her forehead. It makes you want to scream. But I noticed something amazing one time at the gym; when the ad came on, virtually everyone on the treadmills around me looked up at the TVs and stared at it. I couldn't believe it! There is something hypnotic about it's ability to annoy. 
